Non-Standard Employment and the New Standard Employment Contract:

Reflections from a Transitional Labour Market Point of View1

Günther Schmid2

‘Flexicurity’, the flagship of the European Employment Strategy, does not appear

in the title of this essay. The simple reason is that this oxymoron is more

confusing than illuminating. It invites to cheap talk and opportunistic use for

various political interests, the opposite of what is expected from analytical and

deliberative reasoning. All what ‘flexicurity’ is about at the end of the day is how

to ensure decent jobs for all in a world of work that requires both: more flexibility

and new securities for the related higher risks. Not only employers, also workers

need flexibility. For more and more people continuous full-time jobs get out of

reach or are even not preferred in order to fit market necessities with a satisfactory

social life. Not only workers, also employers need security. High quality

production, reliable delivery just in time, adjustment to new technologies and

markets require the security of a skilled, flexible and devoted workforce that does

not opportunistically take every chance to jump to another job.

The employment contract is the main institution to balance these conflicting as

well as complementary interests of employers and the employees. The main

research questions, therefore, is how to adjust the employment contract to the

changing world of work as well as to the changing preferences over the working-

life. I try to respond to this challenge by asking four related sub-questions: Why

do we need a new standard employment contract? Are there any alternatives to the

1 Paper to the Workshop “New directions in Working Life Policy: Reflections in Recent European

Experiences an Implications for Australia” in Sidney, 8 April 2011. 2 Director of the Labour Market Policy and Employment Research Unit at the Social Science Research

Centre Berlin (WZB) from October 1989 to March 2008, and Professor Emeritus of Political Economy at the Free University of Berlin; correspondence: www.guentherschmid.eu.

2

‘old’ standards? What does theory suggest for ‘new’ standards? How can we

improve the governance of so-called ‘flexicurity’?

1. The erosion of the standard employment contract

The answer to the first question is simple: We need a new standard employment

contract because non-standard employment forms are increasing. Before

providing some evidence, attention should be given to the measurement of the

following figures: They all represent levels and not shares. The part-time

employment rate, for instance, equals part-time workers as percent of the

working-age population.

Figure 1: Part-time Employees (only with open-ended contracts, and without self-employed) as Percent of Working Age Population (15-64), 1998 and 2008

EU

GBR

SVK

SLO

SWE

ROM

POR

POL

LET

LUX

LIT

ITA

IRL

HUNGRI

FIN

SPAEST

DNK

DEU

CZE

BEL

AUT

FRA

0

5

10

15

20

0 5 10 15 20

1998

2008

25NLE

~

Source: Eurostat, own calculations

Figure 1 compares the part-time employment rates in European countries at two

points of time: the horizontal axis shows measures for 1998, the vertical axis for

2008. Countries above the diagonal, therefore, show an increase and countries

3

below the diagonal a decrease of part-time work. Netherlands, of course, is the

champion: almost a quarter (25%) of the working-age population is employed in

part-time. And as in most other countries, part-time is still increasing. But the new

member states of the EU like Poland, Hungary and the Czech Republic have very

low and in a few cases even decreasing levels of part-time jobs.

Figure 2: Temporary Employees (including part-timers) as Percent of Working Age population (15-64 years), 1998 and 2008

EU

GBR

SVK

SLO

SWE

ROM

PORPOL NLE

LET

LUX

LIT

ITA

IRL

HUN

GRI

FIN

SPA

EST

DNK

DEU

CZE

BEL

AUT

FRA

0

2

4

6

8

10

12

14

16

0 2 4 6 8 10 12 14 16

2008

1998

Source: Eurostat, own calculations

Level and dynamics of temporary employment (Figure 2) are much more diverse.

Some EU-member states experienced a spectacular increase, for instance Poland.

But temporary employment, including temporary part-timers and temp-agency

workers, increased also in the Netherlands, Sweden and Portugal, whereas the

level even declined in Denmark and Great Britain. Again, apart from Poland, most

of the new member states have low and some even declining temporary forms of

employment.

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No clear trend can be seen in self-employment (Figure 3). One explanation is the

opposite dynamic: Traditional forms of self-employment especially in agriculture

still decline. In some countries however, self-employment is related to the

expanding ‘creative economy’.

Figure 3: Self-employed (full-time or part time own-account workers) as Percent of Working Age Population (15-64 years), 1998 and 2008

FRA

AUTBEL

CZE

DEUDNK

EST

SPA

FIN

GRI

HUN

IRL

ITA

LIT

LUXLET

NLE

POL

POR

ROM

SWESLO

SVK

GBR

EU

0

5

10

15

0 5 10 15

1998

2008

Source: Eurostat, own calculations

If we combine all three forms of non-standard employment to an aggregate non-

standard employment rate (Figure 4), controlling for possible overlaps, we find

again the Netherlands as champion: 43 percent of the Dutch working age

population is employed in some form of nonstandard employment; the lowest

level has the little Baltic state Estonia with only seven percent.

To sum up: With only a few exceptions, non-standard forms of employment

clearly expanded in Europe within the last ten years, and I guess the same is true

for Australia.

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Figure 4: Aggregate non-standard employment rates in Europe, 1998 and 2008

FRA

AUT

BEL

CZE

DEUDNK

EST

SPA

FIN

GRI

HUN

IRL

ITA

LETLIT

NLE

POL

POR

ROM

SWE

SLO

SVK

GBREU

0

5

10

15

20

25

30

35

40

45

0 5 10 15 20 25 30 35 40 45

1998

2008

Source: Eurostat, Labour Force Survey; own calculations. The “aggregate” non-standard employment rate includes part-time, fixed-term and own account work controlling for overlaps; the EU-average excludes Bulgaria, Malta and Cyprus

2. Causes and Consequences of Non-standard Employment

Of course, it would now be necessary to ponder about the causes and

consequences of this development. In this essay, however, I will draw the

attention only to the two main outcomes of well functioning labour markets.

First, to social inclusion through labour market participation: The decisive driver

of increased labour force participation is part-time work, especially for women but

to a lesser extent also for men, young and mature aged workers. Of course, there

are penalties of part-time compared to full-time jobs: pay and job security is

lower, the same holds true for training and job promotion. In Germany and in the

Netherlands, for example, small part-time jobs (‘mini-jobs’) have been the

strongest driver for the expanding low-wage sector. These disadvantages,

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however, are partly compensated by higher job satisfaction, better work-life

balance, better health and safety. That’s why most part-time in Europe is

voluntary. Transitions to full-time are lowest in countries with high level of part-

time.

Temporary work correlates only weakly with labour force participation. In

contrast to part-time work, temporary work is clearly demand driven and

concentrated on sectors with high pressure on cost reduction. It also is strongly

correlated with employment protection. Employers obviously substitute

restrictions in hire and fire by escaping to fixed-term contracts.

Self-employment in Europe is – on the aggregate level – a negative driver of

labour force participation. The explanation is simple. In many countries self-

employment is still strongly related to the declining agricultural sector where still

many women and mothers are helping out without being counted as employed.

However, this aggregate correlation hides the modern type of self-employment,

which is related to the creative sector: the artist labour market, free lancers in the

media and in information technologies. In some countries, for example in the

Netherlands, Italy and Germany, this type of self-employment is even driving

labour force participation.

Modern self-employment is often combined with regular part-time wage work.

Research reveals three motivations related to this combination. First enhancing

utility, which means attaining psychological reward from self-employment that

standard jobs may not provide; second motivation is to look after option security

as a provision against unemployment, which means that those who get

unemployed have already a foot in a new job; third reducing income uncertainty

associated with self-employment by maintaining some income security from the

regular part-time job.

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Let me turn to the second main quality criteria of well functioning labour markets:

economic prosperity through high productivity. Non-standard employment

correlates with GDP per capita, albeit not strongly. This is not surprising if you

are aware of the link between non-standard employment and increasing labour

force participation of women. If women work, they substitute informally provided

goods and services through marketed goods and services. Since women’s higher

labour force participation is strongly connected with higher education, a net

prosperity gain through deepening labour division should be expected. This

potential prosperity gain, however, might be hidden through discriminatory low

wages.

Evidence related to productivity is mixed. At the macro level, increasing

employment was not followed by increasing productivity in Europe. Rather the

opposite is the case, with Sweden as the only exception. Only tiny evidence exists

at the micro level. Rather positive effects are reported for part-time work. Firms in

client-oriented services, for instance, can allocate part-timers according to

opening hours and the flow of clients, and part-timers might work more

intensively. However, firms that excessively use temporary work, especially in

form of temp-agency work, are less productive. They obviously use this form of

employment relationship as a low-cost strategy which is not sustainable. This

confirms the theoretical expectation that genuine productivity based on innovation

requires high internal functional flexibility through highly educated personnel,

long tenures inducing workers with tacit knowledge to cooperate and to engage in

continuous training efforts.

However, more research is needed, especially a closer look into the black box of

firms using flexible labour. Yet, available evidence allows one cautious

conclusion: As far as the negative relationship between non-standard employment

and productivity holds true, one of the presumptions of the Danish flexicurity

model will be undermined. Non-standard employment, in particular fixed-term

contracts, might reduce the redistributive capacity to compensate the risks of high

8

external flexibility through high unemployment benefits and cost-intensive active

labour market policy.

Even the Danish case itself seems to be challenged by a productivity crisis.

Denmark substitutes non-standard employment to some extent through high job

turnover eased though low job protection and generous unemployment benefits.

That clearly makes Denmark the champion of mobility, confirmed in a recent

excellent study comparing all four Nordic countries. Yet in terms of productivity

and GDP growth, Denmark ranked consistently lower than its neighbour countries

Norway and Sweden which have stronger employment protection and less job

turnover.

So, let us come to some interim conclusion: The increasing variability of

employment relations is connected with increasing labour force participation,

especially of women. The outcome seems to be positive related to overall

economic prosperity, but ambivalent or even negative related to the productivity

dynamics. Sure, non-standard employment, per se, is neither more precarious nor

more flexible than standard employment; nevertheless, on average, greater

insecurities are implied. Most countries have not yet solved the risks of increasing

labour market segmentation related to non-standard employment.

The question, therefore, arises: How can we govern the increasing variety of

employment relations in a way that makes equity and efficiency complementary?

One can imagine two ideal type solutions. First the hybridisation of the

employment contract, known as temp-agency work. Employers buy specified

labour services from these intermediaries just in time, and temp-agency workers

provide these services just in time thereby ensuring numerical and/or functional

flexibility; the temp-agencies pool all the related risks, ensuring thereby possibly

all kinds of security: employment-, income-, social-, and option security. This is a

charming model, indeed. It once stimulated the prominent Dutch industrial

9

relations expert Jelle Visser to the provocative statement: “Temp-agencies are the

trade unions of tomorrow.”

I have a lot of sympathies with this view. I am persuaded that the potential of

TAW is still underexploited, especially related to building bridges or stepping

stones for long-term unemployed back into work and related to the increasing

market for career services. Yet, TAW needs a sound regulatory framework,

otherwise one runs into the situation shown in the following cartoon:

Otherwise you run into the situation shown in the following cartoon:

The worker, here, holds the dismissal notice (‘Kündigung’) in his hands, and the

personnel chief, tapping on his shoulder, says: ‘Who knows, perhaps we see us

again in temp-agency form.’ The reader can find examples for this practice in

Germany that would go beyond the space limits of this paper (Schmid 2010,

2011).

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So, despite some promising perspectives, the limits of TAW for future

employment relations are evident. Why, then, not dreaming of becoming a civil

servant? Ideally, this employment contract ensures to workers all kinds of security

just for the little favour of being ready to move with the employer, like in the

former times when the kings were riding through their empires with the key

administrators around them. The ideal-type civil servant provides numerical and

functional flexibility through moving with the tasks as they came up. Apart from

accumulating high skills and multiple skills through continuous education and

learning, civil servants have to demonstrate absolute loyalty to the employer, and

they have to be completely free from any other obligation, especially from unpaid

household chore and care work. This is the reason why women, when they

exceptionally were hired in a civil service position, had to leave this position as

soon as they got married. In Germany, this female celibacy was still in practice in

the 1950s.

Of course, today, the state as employer is emancipated and it serves to some

extent even as a model employer, especially for women. Yet its limits for future

employment relations are evident, too. So, the question arises: Are we lost

between two utopian ‘flexicurity’ models?

3. Some Brief Notes to the Theory of Employment Relationships

What does theory tell? The following can only be a brief sketch to get a rough

picture of the state of the art and further research needs.3 Starting point is the

interest of stylised labour market actors (employees and employers) in the (open-

ended and full-time) standard employment contract. It goes without saying that a

further exploration of this issue would have to differentiate the interests within

these two groups of stylised actors.

3 More can be found in my book on Full Employment in Europe (Schmid 2008, 178-85), and in Schmid

(2010), Schmid (2011) with further references to literature.

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Employees are mainly interested in income security, especially in a steady and

possibly rising income stream over the life course. Job security is the most

important means for income security, but also interesting in terms of stable social

networks. Furthermore, option security (e.g. in terms of available choices of

working time and career opportunities) probably plays an increasingly important

role, especially for employees with family obligations and high educational

potentials. Employees will be ready to accept limitations in voice for these

securities, to be loyal to the employer and not to exit opportunistically (to take up

the terminology by Albert Hirschman).

Employers’ primary interest in a standard employment contract is authority in

order to ensure flexible use of human resources for which they are ready to

exchange some job and income security. They are also interested in reliability for

the sake of security of high quality services for which they exchange some voice

to workers. This interest will be higher the higher the costs for controlling

shirking, which probably correlates with skills and specialisation. Finally, they are

interested in postponing decisions as a kind of liquidity preference in exchange for

some job security. Especially this latter ‘workforce liquidity’ as a tool for

managing uncertainty seems to become even more important than in the early

1950’s when Herbert Simon thought about it. Workforce liquidity has two

dimensions: First, postponing decisions with regard to working times to which I

will present later an important example. Second, postponing decisions with regard

to the tasks of functions the workers are supposed to fulfil.

Now, one can ask: What about the disinterest of each party in open-ended and

full-time employment contracts, which would potentially (not necessarily) be

reflected by an interest in (flexible) sales contracts in which the terms of exchange

are specified?

First, employees might lose some interest in open-ended employment contracts by

having other income resources than wages. Little systematic knowledge is

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available, but anecdotic evidence says that substantial capital income or assets are

available only for a minority. Some kinds of assets, such as real estate and houses,

might even enhance the interest in long-term employment relationships. In return,

a well functioning housing market might be a functional requisite for high

external flexibility.

Second, interest in experience accumulation on occupational labour markets may

reduce interest in open-ended employment contracts. As already noted, there is

some sign for the revitalisation of occupational labour markets, and experience

accumulation may be of special interest for young adults. One can plausibly

assume that temp-agency firms can play an important role in this respect.

Third, the decline of tenure related (‘fringe’) benefits may be reason for losing

interest in long-term contracts. In return, a policy of transferability of such

benefits may increase job mobility; the same effect has the shift of financing

social security from wage contributions to general taxation as it is largely the case

in Denmark.

Fourth, and especially relevant from the TLM point of view, issues of work-life

balance might enhance disinterest in continuous full-time work for at least three

reasons: the interest in combining education with part-time work (especially for

young people), the interest in combining family work with gainful labour market

work (traditionally women, complemented more and more by men sharing those

tasks), and the interest in gradual retirement (elderly) or in utilizing reduced work

capacities of work combined with transfer payments (the disabled). It is self-

evident, that incentives related to (wage-) income tax and (household related)

transfers will weaken or strengthen these interests.

Employers’ interest in open-ended and full-time contracts may decrease, first, by

reduced opportunity costs to buy specialised knowledge induced through

information technology; second by the erosion of internal labour markets,

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complemented by increasing labour mobility through migration or an

improvement of traffic infrastructure; and third by the fact that information

technology decreases the half-life of firm-specific knowledge and depreciates tacit

knowledge. In addition, increase in overall demand volatility (uncertainty)

through the structural shift from (manufactured) mass production to services

(especially around the clock social services) will decrease the interest in long-term

relationships or at least increase the interest in a larger flexibility buffer of human

resources. It remains, however, an empirical question how relevant these possibly

changing circumstances are. Potential countervailing factors are diversified and

customer oriented high quality production, ensurance of innovative human

resource capacities, and increasing recruitment costs for highly specialised

workers or increased firing costs due to regulation.

Nevertheless, as far as disinterests in the standard employment contract on either

side of the contracting parties increases, three alternatives are available: First,

turning to sales contracts, in other words to buy work or services from outside of

the firm instead of relying on the making by their own staff; second, to enrich the

standard employment contract with elements of sales contracts including

negotiated elements of flexibility and security; and third, to enrich sales contracts

with elements of employment contracts. The only exception, obviously, is the

potential interest of employees into open-ended part-time work, which explains

(as already hinted by discussing the figures on part-time work) the need of

redefining the “standard” at least partly by including high volume voluntary part-

time work.4

Let us turn to the first alternative, accepting the factors driving sales contracts,

which means to buy instead to make. These factors could be the availability of

cheaper professional services (e.g., through temp-agencies, world-wide sub-

4 In Germany, the Federal Statistical Office (Statistisches Bundesamt) has already taken over this stance. But

even in this case one has to be aware that continuously working in such qualified part-time jobs requires high wages and/or additional household earners and income from other sources like capital or inherited assets.

14

contractors); the availability of professional freelancers or the reduction of

transaction costs for contracting through specialised legal services.

Possibilities to enhance standard employment contracts through elements of sales

contracts are performance incentives of various kinds, cafeteria payments-

systems, for example exchanging money for working time accounts or vice versa,

and life-course contracts allowing, for instance, to reduce working time with

seniority.

Possibilities to enhance sales contracts with elements of employment contracts are

to support the transition of employees to self-employment with privileged access

to sub-contracts, which can serve as a quality insurance device for the firm. Other

examples are providing training capacities for personal service agencies in

exchange of privileged access to high quality temporary workers, building up trust

relationships by using joint IT infrastructure, or to institutionalise employers’

networks for instance for joint vocational training and education or mutual and

intermediate exchange of employees’ services. These and other possibilities are

not yet well researched.

To sum up: The brief sketch of theory on the employment relationship certainly

needs more careful exploration, among others by including new insights of

behavioural economics related to perceptions of risks and uncertainty. Plausible

reasoning, so far however, tells that on the employees’ side interest in income-,

job- and option security is still high, but demands of voice- or exit options (at least

in form of temporary leaves) are rising; moreover, various work-life balance

issues (especially balancing family and market work) increase the interest in

(preferably open-ended) part-time employment. On the employers’ side, interest

in authority, reliability, loyalty, and flexible internal labour capacities is still high,

but uncertainty of returns in investment increases, volatility of demand goes up,

information and communication technologies make specialised skills around the

world more accessible, project and network oriented types of work raise the need

15

of human resource flexibility, and labour supply deficits might enhances the

willingness to offer part-time work opportunities.

So, to paraphrase an old French saying: The standard employment contract is

dead: Long lives the ‘new’ standard employment contract! What’s ‘new’? This

leads me to the fourth question: How can we improve the governance of so-called

‘flexicurity’?

4. On the Governance of ‘Flexicurity’

As a general strategy, TLM-theory suggests extending the expectation horizon of

labour market participants through flexible contractual arrangements. This

concept goes back to the political theory of Niklas Luhmann who assigns to the

political system the function of ‘binding decisions’. The central element of

binding decisions in policy terms is not to impose a specific behaviour on its

citizens. The thrust of binding decisions is to set in motion a cognitive process, in

other words learning through commonly agreed objectives and values, which still

have to be specified and operationalised through communication and negotiation,

in other words, through a constant process of trial and error.

TLM-theory recommends four elements of such a strategy: First, establishing a

general labour force membership status through universal social rights and duties

that include all kinds of employment and paid or unpaid work. The second goal is

to induce a career orientation over the working-life through making transitions

pay and insuring life course risks beyond the risk of unemployment. The

consequence of such a perspective is to extend unemployment insurance to a

system of employment insurance. The third strategic objective goal is to overcome

inequalities and risk aversion through capacity building, social bridges (stepping

stones) and active securities. Under such a perspective, generous short-term

unemployment benefits should not be seen as ‘passive’ expenditure or

consumption but as ‘active’ investments that enable workers to engage in

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productive job search free of ‘Angst’. Fourth element is to transform danger into

trust through establishing learning communities, negotiated flexibility and

negotiated security.

In the limited space of this essay I will concentrate on one labour market policy

instrument which combines in an almost ideal-type way the four strategies just

mentioned. It is the short-time working scheme, and I explain it as it has been

established in Germany, but this instrument is spreading more and more all over

Europe.

In Germany, short-time work (or ‘Kurzarbeit’) has a long tradition. It goes back

more than 100 years. Today, there are three different types of short-time work

allowance: the major role plays cyclical short-time work to maintain employment

in cyclical troughs; seasonal short-time work helps especially construction

workers to overcome income risks during bad weather and cold winters;

structural short-time work helps companies in restructuring to prepare redundant

workers finding a new job.

It is important to note that workers have a right to short-time work. Even works

councils are entitled to apply for short-time work at the public employment

service. The cut of income due to the reduced working time is compensated pro

rata like unemployment benefits by 60 or 67 percent of the net wage, and these

replacements are often topped up through collective agreements.

On average, 1.2 million workers went on short-time work in 2009, and reduced

their working time by about one third. Yet, it was not only short-time work that

prevented a drastic jump in unemployment. There were other instruments of

internal flexibility used to adjust to the situation. Let me briefly demonstrate this

by the example of the German mechanical engineering industry (Figure 5).

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Figure 5: Internal Flexibility in the German Mechanical Engineering

70,0

80,0

90,0

100,0

110,0

120,0

130,0

2008.01 2008.07 2009.01 2009.07 2010.01 2010.07

Kurzarbeit

reduction of WT accounts

reduction of bargained working-time

reduction overtime

net disponible volume of work

workforce - volume of work gross

incoming orders

output

Source: Jörg Hofmann, IG-Metall Baden-Württemberg

Incoming orders (the red line) fell by almost 50 percent and output (the blue line)

by about 30 percent within less than one year. Both recovered within one year but

remain at a slightly lower level. The workforce however, the dark yellow line,

dropped only by about 3 percent. The bulk of adjustment was managed by

working time flexibility.

However, short-time was only one element. Other ingredients of working time

flexibility were the return to the regular 35 hours week (-1.4%), the reduction of

overtime (-5.6%), the melting down of working time accounts (-5%), and the

reduction of working time by utilising collectively bargained working-time

corridors (-2.8%). Altogether, the volume of working time fell by 20.8 percent,

and rose again to almost the pre-crisis level at the end of 2010 when only a few

short-time workers were left.

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In the whole German economy, this set of internal flexibility measures saved

about 1.4 million jobs in the year 2009, which otherwise would have added 3.5

percentage points to the unemployment rate. This explains the fact that Germany

was the only European country surviving the fiscal and economic crisis without

substantial additional unemployment.

Yet, before we praise this as a ‘German job miracle’, we have to be careful in

assessing this instrument from the TLM point of view. Clearly, there are

advantages compared to dismissals.

First, short-time work allows a much quicker reaction to demand fluctuations than

dismissals because dissolving employment contracts needs more time and implies

higher transaction costs than just reducing working time by maintaining the

employment contract.

Second, short-time work offers employers the opportunity of strategic waiting in

face of uncertainty, which means ‘workforce liquidity’: Nobody knows at the

beginning how big the drop in demand will be and how long this will take. Short-

time work is a reversible instrument, dismissals are not.

The third enormous advantage for employers is task specific flexibility. Short-

time work gives the opportunity to adjust work organisation precisely according

to the specific tasks to be reduced or expanded. The government increased this

flexibility by relaxing conditions which allowed especially small firms (for

instance logistic enterprises and suppliers of large firms) to use the scheme to a

larger extent than in former times.

The fourth advantage is the discretion for social insurance principals to fine tune

the scheme as the situation develops. The government used this discretion by

extending the time of using short-time work up to two years, giving the employers

a comfortable planning horizon.

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The fifth advantage is combining equity and efficiency through various combined

elements: through broader sharing of costs and benefits compared to the

alternative of dismissals. Workers affected by short-time work kept, on average,

80 to 90 percent of their wages. Such income and job security avoids ‘Angst’,

which means panic reactions of workers, for example unreasonable saving which

might reduce effective demand and lead to a vicious circle.

For employers, the remaining costs per short-time worker were between 24 and 46

percent depending on the size of government subsidies. These remaining fixed-

costs are an effective incentive not to misuse the system. The flipside of these

costs are potential savings for employers in the coming upswing. They keep their

trained work force and will not have to pay for new recruitments which are

estimated at about 32,000 Euro for high skilled craft workers or engineers. Last

but not least, both workers and employers are maintaining cooperative networks,

which mean human and social capital.

The federal employment agency, representing the solidaristic risk community of

all workers, spent about 5 billion Euros for short-time allowances. Finally, the

government complemented this risk sharing community through subsidising social

security contributions and – last but not least – a large stimulus package in form

of a so-called wreck-bonus which paid every person 2,500 Euro for exchanging

her (at least 9 years) old car for a new one, costing the tax payer about another 5

billion Euros.

However, short-time work has also clear disadvantages compared to dismissals

(external flexibility). State subsidies may shift the costs to tax payers or to

marginal workers; job security may maintain non-competitive industrial structures

and lead to jobless growth or new job creation only in non-standard form,

especially temp-agency work.

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Finally, at implementing short-time work, Germany failed in at least two respects

from a TLM point of view: the incentives for training during short-time work

were far too low; and a corresponding flexible training infrastructure is still

missing. Yet, all in all, the balance is positive, not least due to an effective public

employment service with established trust relations to employers.

Let me very briefly summarize. I started by asking four questions: First, why do

we need a new standard employment contract? We need a new standard

arrangement because the current standard employment contract excludes many

new forms of employment relations and unpaid work shouldered especially by

women.

Second, are there any alternatives to the ‘old’ standards? Yes, but we should not

search these alternatives among the extremes such as the hybrid employment

contract of temp-agency work or the classical employment contract of civil

servants. Needed are new securities for ‘flexible’ jobs, and new flexibilities for

‘secure’ jobs.

Third, what does theory suggest for ‘new’ standards? Theory suggests moving

towards a universal status of labour market citizenship, to make social security

independent from specific types of employment relationships, to build up

adjustment capacities at the supply and demand side, and transportability of

entitlements to foster job-to-job transitions.

Fourth, how can we improve the governance of so-called ‘flexicurity’? Balancing

flexibility and security requires, first, to endow labour market citizens with active

securities beyond employment and, second, to extend their expectation horizon

through an opportunity set of social bridges and learning communities.

References

Schmid, G. (2008), Full Employment in Europe – Managing Labour Market Transitions and Risks, Cheltenham, UK, and Northampton, MA: Edward Elgar

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Schmid, G. (2010), The Future of Employment Relations: Goodbye ‘Flexicurity’ – Welcome Back Transitional Labour Markets?, Working Paper WP106, AIAS, University of Amsterdam, http://www.uva-aias.net/uploaded_files/publications/WP106-Schmid.pdf

Schmid, G. (2011), Übergänge am Arbeitsmarkt: Arbeit, nicht nur Arbeitslosigkeit versichern, Berlin: edition sigma